Tax returns, refunds face delay

Feb. 25, 2013

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They’ve had to cool their heels before filing their tax returns while the IRS scrambled to come up with new computer software, forms and instructions to put tax code changes Congress passed Jan. 2 into effect.

The changes were enacted as part of an 11th-hour agreement to avoid another fiscal cliff.

The Jan. 2 agreement meant that the vast majority of tax filers — more than 120 million households, according to the IRS — could not start e-filing their tax returns until Jan. 30, eight days later than usual. That meant tax refunds could be late.

The changes and delays in filing “has put me a couple weeks further back than I normally am,” said Michael Willis, a CPA in Lehigh Acres.

The remaining households should be able to file this week and into March, including people claiming residential energy credits, depreciation of property or general business credits. The IRS said that additional changes to computer processes and revision of forms were needed for those returns, because they are more complex. While people have less time to file their taxes, the deadline is still April 15.

Erika K. Harp, CPA with Fort Myers firm Hughes, Snell & Co., P.A., also said they’re looking at a couple of weeks’ delay as the flood of returns began pouring in Jan. 30. “We haven’t really experienced a problem with any one receiving a refund within the 21-day period.” Other delays affecting taxpayers can include increased wait times when calling the IRS with questions, she said.

“We’ve only processed so far about half the returns normally out at this time of the year,” said Randy Wright, tax partner at Markham Norton Mosteller Wright & Co. PA in Fort Myers. He has another dozen returns, pending more IRS forms being approved, he said. “I can tell you most taxpayers are taking it pretty good.”

However, there is still almost two months to go, he said. If waits become any longer, tolerance may turn to testiness as people become more frustrated and worried about filing on time.

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More waits may be exactly what’s in the wings if automatic cuts called “the sequester” become a government reality Friday. The Jan. 2 Congressional agreement was just a postponement, not a solution. Now, if national politicians don’t agree on $1.2 trillion in cuts to federal spending by Friday, sequestration kicks in — the same cuts that Congress staved off with its Jan. 2 agreement. They include across-the-board cuts at federal agencies.

“We can’t speculate as to what it will do, how it will affect filing and what the implications will be,” said Gene King, a spokesman for H&R Block. “What we can say is that we don’t anticipate the sequester to have an impact on taxpayers’ ability to prepare or file their income tax returns. We do encourage taxpayers to file as they normally would, as those first filed will be those first funded.”

But a White House fact sheet outlines more dire impacts from sequestration.

“The cuts to operating expenses and expected furloughs at the IRS would result in the inability of millions of taxpayers to get answers from IRS call centers and taxpayer assistance centers and would significantly delay IRS responses to taxpayer letters,” the document said.

There would also be fewer reviews of tax returns, and reduced ability to detect and prevent fraud. That means less money recovered by the IRS, ultimately costing taxpayers and increasing the deficit, the document said.